SegWit

SegWit that stands for Segregated Witness, is a proposed Bitcoin program improvement, dedicated to change several serious problems. SegWit was initially planned for the Bitcoin Core, designed by its enthusiastic crew. The Bitcoin Core at the moment is the most used Bitcoin processing software, which is mainly utilized among entrepreneurs.

Initially, the improvement was planned to solve transaction malleability, which was an important Bitcoin protocol weakness. Even though this vulnerability has never been of high danger for users, it was unfairly used several times, which demonstrated that patching was required.

Moreover, SegWit proposed more significant benefits, and the initial main purpose of removing the transaction malleability was changed to resolve the Bitcoin scalability problem. As it was described in the numerous articles on the Internet, Bitcoin was subjected to huge scaling difficulties that were rapidly growing.

So how has SegWit managed to resolve the Bitcoin scalability issue? SegWit has allowed to rearrange internal data of Bitcoin’s block and opened the way to additional enhancements via upper-plane proposals implementation.

An insufficient block size has always been a significant disadvantage of the Bitcoin environment. Blockchain consists of the arranged string of blocks that contain information about all transactions. Consequently, blockchain is a ledger of all transactions carried out within the network. Apparently, we are talking about all approved transactions.

What makes things complicated is the block size limited by 1024 kilobytes. This is an insufficient amount to process the huge number of transactions made by all network members every second. Thus, the majority of participants has to wait for their transaction to be processed and confirmed, which can last up to several weeks. Taking into account that the number of participants is constantly increasing, it is not a surprise that transactions number is also getting higher, while the restriction on the block size remains unchanged.

Evidently, the problem might get even worse, but fortunately, the SegWit application has made it possible to solve it.

First, SegWit has increased the block size by four times, giving us 4096 Kb. This number assumes that the block is totally filled, but in fact it is not always true. For each block, its size is determined by the activity of the network participants. Some experts expected that an average value of new blocks would be close to 2000 Kb when SegWit was implemented.

Second, as soon as transaction malleability was removed, SegWit got rid of small Bitcoin flaw that prevented many useful upper-plane projects from being activated. The best example of such projects is the Lightning Network, which is supposed to significantly increase the network bandwidth by putting transactions to time locked side channels.

So what was stopping SegWit from being implemented? It was the fact that 95% of participants had to approve SegWit enhancements.

Having the lack of support for newly invented requirements, the whole society might got involved in the forking process. First group of participants would use new rules and the second group would just stick to the classic ones. Such a double chain existence for a single cryptocurrency was something really unwanted by all members.

The selected path might bring unforeseen and unwanted results that would have a bad influence on the prices of both new cryptocurrencies. To keep the network safe from a fork, the SegWit team prepared a list of special requirements and restrictions. One of them said that the activation required at least 95% of approval. This point was reached in August 2017. Besides, there were other reasons against SegWit — technical, political, and ideological.

There was an opinion that SegWit would not be able to deal with the problems as it had claimed to. In particular, some people was sure the planned change of the block size could not cover the growth of the Bitcoin society.

In fact, many experts had the similar opinion toward the technical competence of SegWit creators and the solidity of the technology. Nevertheless, it was unbelievably hard to assess the opinions of two parties for those who had no programming experience.

Actually, not only did the mentioned discussion concern engineering aspects but also a management side. Of course, that made it all more complicated. A lot of SegWit authors, apparently, worked on the Blockstream foundation whose main products were side-chain solutions. Hence, some society members stated that such connection might cause a conflict of interest, as the block size hike could stimulate demand in side-chain solutions. Nobody ever proved this opinion but many people believed it was true and kept speaking out against the SegWit implementation.

The major ideological thesis against the improvement stated that SegWit did not provide scalability but preserved a required decentralization level in the Bitcoin environment. As it was mentioned before, SegWit could remove the major complexity of Bitcoin’s low transaction volume only if it was accompanied by top-plane side-chain products like the Lightning Network.

The main obstacles here, according to some opinions, were side-chain operating principles. So to stop relying on overloaded blockchain, they shifted their assets to a top-plane solution. After that, all transactions were carried out by trustworthy third parties without broadcasting them through the whole ecosystem, thus preventing unnecessary losses.

Unfortunately, Bitcoin was supposed to stay away from the kind of relationships that involves intermediaries. This sort of step-back was inappropriate for some people since it contradicted Bitcoin’s philosophy.

But who supported SegWit then? In fact, there were many people and foundations that had got interested in the SegWit implementation and stuck to the idea from the very beginning. This list included such well-known persons as Andreas Antonopoulos, Samson Mow, Charlie Lee, etc.

As it was mentioned above, the point of acceptance was reached in August 2017. Moreover, 100% of the mining community expressed their agreement two weeks thereafter. Since then, all mining nodes require software changes to be implemented. Even though not all members of the network use the newly proposed option, statistics shows that the SegWit blocks number is constantly rising.

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